ECB interest rates could be lowered next year, say analysts

HOMEOWNERS are unlikely to see any interest rates hikes in the coming months, with figures also showing the cost of living edged lower, as did the price of insurance, entertainment and cars.

The European Central Bank (ECB) has signalled that interest rates are now on hold, with some analysts saying they could even be cut at the end of the year or the start of 2012.

The ECB said it was keeping interest rates at 1.5%, following hikes in April and June.

Senior economic adviser with Ernst and Young, Marie Diron, expects rates will remain on hold for “at least the next few months”.

“We think that there is a significant risk that the eurozone could fall back into recession. If this occurs, the ECB should then consider cutting rates to below 1%,” she said.

Head of research with Savills Ireland Joan Henry said it is good news for homeowners and those considering entering the market.

“It removes an element of uncertainty that has been hanging over those considering a moving. Homebuyers can now plan on the basis of an ECB rate of 1.5% maximum for the foreseeable future.

“It is, of course, imperative that the domestic banks do not increase rates again independently of the ECB and, therefore, undo the benefit of this for those on variable interest rates or those entering the property market.”

Meanwhile, a Red C poll has found that 84% of people believe the Government should introduce some form of debt forgiveness.